Friday, October 5, 2012

Myanmar hesitates at crucial hurdle on road to reform

Countries
that want to open up their economies to the world have to come up with
a good foreign investment law. Myanmar is no exception. Indeed, this is
one of the most important steps that the government under President
Thein Sein has to take on its road to reform. But so far, the draft
version of its new investment law has met with strong opposition, both
from local stakeholders and from potential investors overseas.

First of all, the draft details remain
secret, like many other new laws currently being drafted and vetted by
politicians in Nay Pyi Taw. Only local stakeholders, National Assembly
members and government officials are allowed access to the drafting
process. So, when the draft was leaked last month, it sparked an
explosion of questions and debate in the international media. The president was supposed to sign the
law after the National Assembly passed it recently, but instead he
stalled. It was reported that some aspects of the law were not
attractive enough for potential investors. For instance, foreign
investors were not permitted to hold more than 49-per-cent ownership of
a joint venture. They also needed to invest a minimum of US$5 million
(153 million baht). This represented too many restrictions for
investors in small and medium-sized enterprises.

Local businessmen and ordinary Myanmar
citizens have expressed dissatisfaction with the draft law. Some fear
it would open the floodgates for foreign investors and eventually kill
off the more backward and weak locally owned companies. Meanwhile,
business cronies of Myanmar's political elite are scared that opening
up the market would end their monopolies. But, regardless of the objections,
Myanmar will soon have a foreign-investment law. And like it or not,
foreign investors will be eager to exploit this "virgin" country.

Myanmar is undergoing unprecedented
development in all aspects of life. Thein Sein is working together with
opposition leader Aung Sang Suu Kyi to raise their homeland's profile.
It is gratifying to see two leaders at opposite ends of the political
spectrum complimenting each other's good deeds for their country. By
contrast, Thai leaders of all colours seem incapable of such vision and
cooperation.

This once-isolated country is moving
quickly into the global community, knowing the risk of mishaps it faces
along the way. But it has no choice if it wants to avoid the fate of
the many other countries that have bogged down on slow roads to reform.

Thein Sein's government is determined to
move the country forward and compete with other Asean members. They
would refuse to admit it, but officials in Nay Pyi Taw are confident
they can overtake Laos and Cambodia in the next few years. In a decade
or two, they should also be able to compete with Vietnam, and then
Thailand. It is no surprise that they've been busy studying good
governance practice around the world. For their part, foreign donors
have been quick to respond with offers of aid and expertise.

Myanmar knows its potential very well.
The country is rich in resources, both natural and human. It also now
has political leaders whose legitimacy the world recognises and
acknowledges. Confidence in the country is growing after the joint
visit of Thein Sein and Suu Kyi to the US. Economic sanctions will now
become a thing of the past. Myanmar has been given the green light to
proceed like any other country in the world. Indeed, it wants to make
sure it can outperform expectations.